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Trendspotting: Maximizing Your On-Demand ROI

As users come to rely on on-demand solutions, they become hard to turn off, even if they're not delivering positive ROI. Before starting, Rebecca Wettemann says, evaluate your options, do a quick cost-benefit analysis, make sure you train users, and get managers involved.

On-demand solutions have gotten a lot of marketing hype in the past 12 months, but making decisions that maximize ROI requires going beyond marketing, both in the purchase decision and in managing the ongoing use of technology. We've explored benefits from on-demand sales-force automation, customer service, E-commerce, and procurement solutions and found a lot of positive ROI. There are potential benefits from hosted or on-demand technology, but there's no such thing as a free -- or monthly-fee based service -- lunch.

Just like with any other technology decision, evaluation of an on-demand solution requires a structured view of the ongoing costs and benefits that the solution will deliver. That sounds complicated, but if you listened to my grandma, she could tell you how to make good decisions about on-demand. You should always listen to your grandmother: Three key lessons I learned from mine were to always appreciate what you're getting, don't every stop being creative about how you can get the most value from things (even if they may seem free or cheap), and to take a sweater.

Appreciate what you're getting. Free trials, quick deployments, and per-month pricing may make on-demand solutions seem more like a magazine than a business application. As the functionality of on-demand solutions grows, and your users come to rely on them, they become more and more difficult to switch or turn off, even if they're not delivering positive ROI. Before you move to a "basic" on-demand solution for sales-force automation or another business function, make sure you evaluate your options, do a quick cost-benefit analysis, and get management engaged " otherwise, your cheaper deal may just be a cheaper mistake.

Another fallacy about on-demand is that users don't need training. One company deployed an on-demand sales-force automation solution because it was "almost free" -- but found that without any clear view on how to use it, users never touched it. Even basic training on a solution can improve adoption, help you to identify barriers to maximizing value, and give you power users that can drive configuration of the solution that will support key business needs you may have missed. Siebel's latest version of its on-demand sales-force automation solution, for example, includes a sales-coaching component: If you pay attention, you can use it to reinforce what management is telling sales throughout the sales process.

Be creative about getting more value. Grandma always used a tea bag twice and saved those egg cartons -- you never know when you might need them. I won't advocate saving egg cartons in your office, but I would suggest continuing to look at on-demand solutions with a fresh eye for how they can be leveraged for more value. Remember, just because they seem cheap doesn't mean you should stop thinking about how to leverage them for greater returns.

One of the greatest benefits from the on-demand model is that you can leverage new functionality and features as they become available without costly upgrades -- not taking advantage of that is like leasing the same car for 10 years. Follow your vendor's road map and make sure your wish list is on its functionality time line -- and explore the features of each new version for how you can extract more value.

On-demand also gives you the flexibility to deploy to varied groups of users. For example, leveraging the knowledge base that's built in customer service for sales and marketing may give you real ROI bang for your on-demand buck. RightNow Technologies' service component, coupled with its sales component, can extend and enhance productivity and customer satisfaction; with other vendors' solutions as well, you should be looking at integration and other options that help you wring more value out of your investment on an ongoing basis.

Take a sweater. You never know, it might be chilly later. Or your sales team could downsize, or acquisition could require you to bring 100 new employees on board quickly. Even with an on-demand solution, it helps to be prepared. That simply means knowing where you're getting value today, where you plan to get value in the future, and being aware of changes in the weather. On-demand gives you greater flexibility to take advantage of new opportunities and weather business challenges, but only if you're prepared to use it.

Evolving technology offerings and pricing pressures makes this a great time to identify areas in your IT budget that could be reduced by using an on-demand solution -- or find new opportunities for IT to deliver greater value to your organization. Common sense, a clear view of value, and keeping Grandma's advice in mind will help you navigate through the marketing hype to maximize return on investment.

Rebecca Wettemann is VP of research at Nucleus Research, a global tech consulting and advisory firm. Its analysts blend financial analysis and case-based investigations with technology expertise to deliver return-on-investment data. She can be reached at Rebecca@NucleusResearch.com.

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